Black Friday may not save November sales

Wal-Mart and Gap seen as early holiday winners

By

AndriaCheng

NEW YORK (MarketWatch) — Despite improved traffic, the much-touted Black Friday weekend sales didn’t look like it would salvage November same-store sales for retailers, analysts said.

Ahead of retailers reporting same-store sales results for the month on Thursday, analysts over the weekend cut their November estimates to a 2.9% sales gain from a 3.1% increase last week, according Retail Metrics. The month’s tallies were already under pressure with superstorm Sandy expected to cut sales by as much as 2 percentage points and the U.S. presidential election also distracting shoppers early in the month, Retail Metrics data showed. See related Black Friday story.

“Black Friday may not be enough to save November,” Deustche Bank analyst Charles Grom said, adding his team made 400 calls to Wal-Mart Stores Inc.
WMT, -0.19%
and Target Corp.
TGT, -0.32%
stores and surveyed more than 1,000 shoppers, besides store visits. “We walked away uninspired by this weekend’s sales results relative to prior years. While most stores were very crowded on Thanksgiving night/early Black Friday morning, it’s clear that sales volume is getting shifted with the pie not necessarily growing.”

Mall traffic tracker ShopperTrak also said Black Friday proved to be a retail mixed bag. While foot traffic rose 3.5% on Black Friday to 307.7 million store visits, retail sales actually declined 1.8% on Friday with some spending shifted to Thursday. The firm still expects Black Friday to be the season’s biggest traffic and sales day with eight of the top 10 shopping days not arriving until December.

Andria Cheng/MarketWatch

Macy's crowd right before midnight in New York City

Retailers on Monday unleashed their so-called Cyber Monday sales in hope shoppers returning to work after the weekend will give them more sales boost. Read related Cyber Monday story.

National Retail Federation’s data from the weekend was more upbeat, showing traffic from Thursday through Sunday rose to 247 million from 226 million last year and the spending for the weekend up 14% to $59.1 billion. NRF data also showed average holiday shopper spending climbed 6.3% to $423 this weekend.

The big question

“The question now becomes, can retailers build on this sales momentum or were sales pulled forward and a significant lull looms with almost a full month to go before Christmas,” said Ken Perkins of Retail Metrics. “We fear a sizable lull once Cyber Monday passes.”

The S&P Retail Index fell on Monday after five straight trading session gains.

“The dynamics of Black Friday weekend are changing,” said Janney Capital Markets analyst David Strasser. “It is becoming less profitable. The Thanksgiving day openings increase (expense) dollars with at best modest (sales) benefits as total sales get spread over a longer time period of time. Consumers (were) making planned purchases/door busters, and not buying/delaying higher margin impulse attachments/purchase.”

While Black Friday doesn’t a season make, it does give an early read on which retailers have been more successful attracting shoppers and likely staying at top of mind with consumers, analysts said.

While traffic and sales read have been mixed, overall Wall Street consensus pointed to reduced promotional levels, which analysts say may help boost profit.

Wal-Mart, Gap claim top prize

So far, Wal-Mart looks to be an early winner, analysts said. Retail Metrics data showed consensus fourth-quarter comparable sales estimate for Wal-Mart, which doesn’t report monthly sales, ticked up 0.1 percentage point over the weekend. The company, which had one-hour price and product availability guarantees for three items and staggered three doorbuster time slots, said it had a record 22 million shoppers on Thursday, with 10 million transactions processed between 8 p.m. and midnight. It also said that the company didn’t experience employee walk-offs as promised by the United Food and Commercial Workers union.

“Despite a lot of potential negative publicity, it still seems (Wal-Mart) was the winner on Black Friday,” said Strasser.

“Gap was a big winner,” said Caris & Co. analyst Dorothy Lakner. “Unlike last year, when Gap had color, but lacked style, this year style is back and shoppers responded.”

Analysts have mixed opinions on troubled retailer J.C. Penney Co., which opened stores at 6 a.m. on Friday and unveiled its “only sale of the year” to honor the “American tradition.”

Citigroup analyst Deborah Weinswig picked Penney, along with Wal-Mart and Target as her Black Friday winners, adding she didn’t think Penney’s later openings hurt its traffic significantly as she said “home and shoes saw brisk sales.”

Other analysts said the company’s later openings compared to rivals like Macy’s and Kohl’s likely hurt its traffic.

There were signs of hope for the retailer online, according to Experian Marketing Services. J.C. Penney moved up from being the 8th most visited retail site online on Thanksgiving Day to the 5th most visited on Black Friday. Among the top 5 sites, J.C. Penney saw the biggest day-over-day growth at 26%.

Aeropostale; Best Buy

“A potential turn at (Abercrombie) and strong product acceptance at (American Eagle) may result in a shift of dollars away from” Aeropostale, said Janney’s analyst Adrienne Tennant, who cut her rating on Aeropostale to neutral from buy. “It’s shifting of incremental market share from one competitor to another.”

Aeropostale slumped 6% while Abercrombie was up almost 1%.

Andria Cheng/MarketWatch

Shoppers waiting in line for Best Buy’s midnight opening at Union Square in New York City on Thursday night.

Electronics retailer Best Buy looked to be a big traffic winner, Deustche Bank analyst Mike Baker said. He said his survey showed 86% of the 66 Best Buy stores had busy traffic, up from 83% last year. Beleaguered Best Buy also appeared to see some increase in traffic online. Its online traffic on Thanksgiving day more than doubled, the biggest gain among the top five retail traffic sites on that day, according to Experian Marketing Services.

Still, the big question facing the retailers is how much of the traffic boost is at the expense of profit, analysts said.

“We are unsure how these crowds translated into sales or margins,” Baker said.

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